One mistake I always make when it comes to talking about personal finance and investing is that I often think that if I can convince people of the merits of a certain path or strategy, they will then follow that path and enjoy the fruits of their new knowledge. Of course that completely ignores the massive mental blocks we erect when it comes to executing strategies that require a change in any field or subject area. In our current age of unparalleled information density, many of us tend to drift into “paralysis by analysis mode” and just keep reading about stuff instead of actually implementing the strategies we’re learning about. It’s relatively easy to tell yourself, “Oh, I’ll just read a few more blog posts or news articles about something before I get off my couch and fund that Questrade or Wealthsimple investing account.” There is always next weekend after all.
John Robertson, known as Holy Potato to the online personal finance community, seeks to bridge this implementation gap with his newest offering under the appealing name The Value of Simple – A Practical Guide to Taking the Complexity Out of Investing. He seeks to explain how,
“Investing really can be easy, and I mean actually easy, not like dieting easy where they say it’s easy – “just eat less” – but hard to actually pull off in practice.”
Who Is This Guy?
The first thing you should know about John is that he is smart. Not like, “Man, my friend gets the odd Jeopardy question right” smart, but “I have a Ph.D. in Medical Biophysics” smart. But not all smart people are good at personal finance (very little correlation oddly enough) and it’s even rarer to find a really smart person who is good at explaining personal finance.
If you want proof that John is the real deal check out his blog or simply use Google to find some of his comments on this site. When “Holy Potato” comments on one of my articles the end result is that 6 replies later I have learned something about an area I thought I was pretty close to being an expert in. Plus, readers who were patient enough to scroll through the exchange have gleaned as much information from the comments section as from the article itself!
The Valuable Part of The Value of Simple
To be honest, you’ll find the first half of John’s book pretty similar to our writing. We both talk about why cutting fees is so important for Canadian investors, why stock-picking and mutual funds are usually bad ideas, and why passive index investing is the way to go for most folks. John also explains how compound interest works (using a pretty entertaining “reproducing like bunnies” metaphor) and sheds some light on investing basics such as asset allocations and Canadian tax-advantaged accounts.
All of that other stuff is good, but you can get it in several different places for free. Fortunately, there is so much other awesome stuff that makes this book a great buy. Here are my personal highlights:
- Very handy little chart that compares the characteristics of mutual funds, index mutual funds (commonly referred to as “index funds” for simplicity’s sake), and ETFs.
- A great look at John’s own portfolio allocations (not specific numbers but percentages). This provides a great example for looking at how a person needs to consider all of their different investing accounts including their TFSA, RRSP, RESP, and non-registered accounts as well as how John re-balances them all from time to time in a very efficient manner.
- The runner-up for my favorite chapter of the book is titled “Breaking Up is Surprisingly Easy to Do”. It’s about how to cut the cord with your commissioned salesperson financial advisor and how to combat some of the common BS that is often thrown at people who want to start DIY index investing. Salespeople have training specifically to mislead people by showing statistics without context, making statements that sound plausible but are actually completely false, and way overvaluing what they offer. John explains why he’s a big fan of fee-only advice and I completely agree. He even looks at how to exit out of mutual fund investments without taking a big hit on early withdrawal penalties that were designed by the mutual fund companies to keep Canadians in a state of inertia about their investment portfolio.
- John wants to help you execute the simple strategies we both advocate for so badly, that he even provides illustrative screenshots to help you navigate through investment accounts and various different types of statements you might interact with.
The Best Part – Where and How
If passive index investing is the “what” that most Canadians badly need to know, John is one of the only authors out there right now that explains to Canadians exactly how to implement these passive strategies and where the three best options can be found specifically in Canada.
This is the best and most unique part of the book. I completely agree with John’s choices for where to steer Canadian investors. In no particular order he recommends:
- Tangerine’s Turn-Key Accounts Indexed Accounts
- TD’s eSeries Index Funds
- Index ETFs from Questrade
- Canada’s robo advisors
He compares each of these options in-depth, explains which options might be best for various types of investors, and explains how to use each in a step-by-step manner.
It’s important to note that each of these three investing options uses passive index investing strategies that both John and I are big fans of, they are just different ways of going about it. You won’t find a better illustration of exactly how to begin your investing journey. If you’re new to investing or are convinced passive index investing is the way to go and just need a final piece of the puzzle, this is a great resource that shouldn’t be missing from your library.